Stanley v Wilde

Facts

A mortgage transaction contained terms that operated to impede the mortgagor's ability to recover the security after discharging the secured debt. The question was whether such a fetter on the right to get the property back could stand. The court examined the essential nature of a mortgage as security only.

Issues

• Whether a mortgage may contain a term that prevents or hampers the mortgagor's right of redemption
• What is the essential character of a mortgage transaction

Arguments

The mortgagee argued the parties were free to contract on the agreed terms and the bargain should be enforced. The mortgagor contended a mortgage is security only and any clog defeating redemption is void in equity.

Held

Lindley MR held that a mortgage is a conveyance of property as security for a debt, and the security character cannot be converted into something else by collateral terms. Any provision inserted to prevent redemption on payment of principal, interest and costs is a clog or fetter on the equity of redemption and is therefore void. The right to redeem is an essential incident of every mortgage and cannot be bargained away. The maxim 'once a mortgage, always a mortgage' was reaffirmed.

Ratio decidendi

A mortgage is security only; any term that clogs, fetters or destroys the mortgagor's equity of redemption is void, however freely agreed.

Significance

The foundational statement of the clog-on-redemption doctrine; consistently adopted by Indian courts as the bedrock of S60 redemption jurisprudence and cited in Seth Ganga Dhar and Pomal Kanji.

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